HB0176

HOUSE BILL 176

50th legislature - STATE OF NEW MEXICO - second session, 2012

INTRODUCED BY

Nate Gentry

AN ACT

RELATING TO TAXATION; PROVIDING CORPORATE INCOME TAX OR PREMIUM TAX CREDITS FOR TAXPAYERS WHO PROVIDE CAPITAL TO QUALIFIED COMMUNITY DEVELOPMENT ENTITIES THAT INVEST IN LOANS AND OTHER FINANCING FOR BUSINESSES IN CERTAIN LOW-INCOME AREAS; PROVIDING FOR TAX CREDIT CERTIFICATES TO BE TIERED OVER SEVEN YEARS WITH FIVE YEARS OF ALLOWABLE CARRYOVER; PROVIDING THAT TAXPAYER ELIGIBILITY BE DETERMINED AND TAX CREDIT CERTIFICATES BE ISSUED BY THE ECONOMIC DEVELOPMENT DEPARTMENT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

SECTION 1. A new section of the Statewide Economic Development Finance Act is enacted to read:

"[NEW MATERIAL] ADMINISTRATION OF STATE NEW MARKETS TAX CREDITS BY THE ECONOMIC DEVELOPMENT DEPARTMENT.--

A. The department shall receive applications for and determine the eligibility of qualified community development entities and certify qualified equity investments. The department may certify qualified equity investments and issue certificates of eligibility subject to the following limitations:

(1) the maximum amount of qualified equity investments that may be certified and upon which the thirty-nine-percent state new markets corporate income tax credits and thirty-nine-percent state new markets premium tax credits may be calculated shall be two hundred million dollars ($200,000,000);

(2) the maximum amount of state new markets corporate income tax credits and state new markets premium tax credits that may be issued in certificates of eligibility shall be seventy-eight million dollars ($78,000,000);

(3) the department shall issue certificates of eligibility amounting to no more than sixteen million dollars ($16,000,000) of aggregate state new markets corporate income tax credits and state new markets premium tax credits for any one calendar year; and

(4) the maximum amount of a qualified low-income community investment in any one qualified active low-income community business, on a collective basis with all of the affiliates of that qualified active low-income community business, that may be counted toward the certification of a qualified equity investment, whether issued to one or several qualified community development entities, shall be ten million dollars ($10,000,000).

B. The department shall review certifications on an annual basis. The department shall notify the taxation and revenue department or the insurance division of the public regulation commission when a qualified equity investment loses its certification by providing a final notice of decertification to the taxation and revenue department, the insurance division of the public regulation commission, the qualified community development entity and known purchasers within two weeks of decertifying the qualified equity investment.

C. The department shall coordinate at least monthly with the taxation and revenue department and the insurance division of the public regulation commission to maintain a record of the cumulative amount of certified qualified equity investments and the aggregate amount of state new markets corporate income tax credits and state new markets premium tax credits that have been issued. To provide guidance to qualified community development entities regarding the amount of credit capacity remaining, the department shall post monthly on the department's web site the aggregate amount of qualified equity investments that may be certified for the remainder of the calendar year.

D. Prior to October 1, 2012, the department shall establish by rule the procedures, forms and minimum criteria for a qualified community development entity to apply for certification of a qualified equity investment and a determination of eligibility for a state new markets tax credit. Prior to October 1, 2012, the department also shall establish by rule the procedures for implementation and administration of the state new markets tax credits and the immediate and long-term goals to be attained through the issuance of tax credits. The rules and forms shall be presented to the revenue stabilization and tax policy committee and other appropriate legislative committees for comments and approval during the 2012 legislative interim.

E. The department shall provide an application form on which a qualified community development entity shall indicate:

(1) the name, address and tax identification number of the qualified community development entity and evidence of the entity's federal certification as a qualified community development entity;

(2) a description of the proposed purchase price and structure, amount and purchaser of the equity investment or long-term debt security;

(3) an acknowledgment and waiver allowing information from the application and a purchaser's tax returns, reports and filings to be used for the department's report to the legislature about the effectiveness of the new markets tax credits;

(4) the name and tax identification number of the purchaser of the qualified equity investment that the qualified community development entity expects to be eligible to claim the new markets tax credit allowed as a result of the issuance of the qualified equity investment;

(5) information about the types of qualified active low-income community businesses in which a qualified community development entity will invest the proceeds of a qualified equity investment, including a detailed description of:

(a) the types of businesses to receive the qualified low-income community investments;

(b) the location of the businesses to receive the qualified low-income community investments;

(d) the physical infrastructure that may be created or preserved; and

(6) any other information required by the department in its rules.

F. The application submission shall include:

(1) a copy of the allocation agreement executed by the qualified community development entity, or in the case of a subordinate qualified community development entity, the entity that controls or is under common control with the subordinate qualified community development entity, and the federal community development financial institutions fund;

(2) a certificate executed by an executive officer of the qualified community development entity, or in the case of a subordinate qualified community development entity, the entity that controls or is under common control with the subordinate qualified community development entity, attesting that the allocation agreement remains in effect and has not been revoked or canceled by the community development financial institutions fund; and

(3) an application fee of five thousand dollars ($5,000) that shall be nonrefundable, payable to the department.

G. The department shall approve applications that comply with this section and its rules in the order that completed applications are received. Applications received on the same day shall be deemed to have been received simultaneously. For applications received on the same day and deemed complete, the department shall certify, consistent with remaining tax credit capacity, qualified equity investments in proportionate percentages based on the ratio of the amount of qualified equity investment requested in an application to the total amount of qualified equity investments requested in all applications received on the same day. If a pending request cannot be certified fully because the annual cap has been met, the department shall certify the portion that may be certified unless the qualified community development entity elects to withdraw its request rather than receive partial credit. Withdrawn applications may not be resubmitted. Any new or resubmitted application shall be submitted with the full five-thousand-dollar ($5,000) application fee for the qualified community development entity to be considered for a tax credit.

H. Within sixty days of the receipt of an application that the department determines to be complete, the department shall grant the application in whole or deny the application in whole or in part. Subject to the limitations in this section, the department's rules and the new markets tax credits provisions in the Corporate Income and Franchise Tax Act and the New Mexico Insurance Code, the department shall certify the proposed equity investment or long-term debt security as a qualified equity investment. If the department denies any part of the application, it shall inform the qualified community development entity of the grounds for the denial. The qualified community development entity shall have fifteen days after the notice of denial to provide any additional information required by the department to its application. If the qualified community development entity provides the additional information requested within the fifteen-day period, the application shall be deemed to have been complete as of its original date of filing. If the qualified community development entity fails to complete its application within the fifteen-day period, the application shall remain denied and must be resubmitted. Any resubmitted application shall be submitted in full with a new submission date, subject to the aggregate cap on the amount of qualified equity investments that the department may certify as of the new submission date.

I. The department shall provide written notice of the certification to the qualified community development entity. The notice shall include the names of the purchasers listed on the application that are eligible to use the new markets tax credit and their respective tax credit amounts. If the name of a purchaser that is eligible to use a tax credit changes due to a transfer of a qualified equity investment or a change in the allocation provisions of a qualified community development entity's partnership or operating agreement, the qualified community development entity shall notify the department of the change.

J. Within ten days after receiving notice of certification, a qualified community development entity shall issue the qualified equity investment and shall receive cash in the amount of the certified purchase price. The qualified community development entity shall provide the department with evidence of the receipt of the cash investment within ten business days after receipt.

K. If the qualified community development entity does not receive the cash investment and issue the qualified equity investment within ten days following receipt of the certification notice, the certification shall lapse, the application shall be permanently rejected and the application fee shall be forfeited. A certification that lapses reverts to the department and may be reissued to other applicants.

L. A purchaser of a qualified equity investment that has been certified by the department under this section shall earn at the time of investment a vested state corporate income tax credit or state premium tax credit equal to thirty-nine percent of the purchase price of the qualified equity investment. Within thirty days of receiving evidence of a qualified community development entity's receipt of cash in the amount of the purchase price of the qualified equity investment, the department shall issue to the qualified community development entity certificates of eligibility as follows:

(1) for the calendar years that contain the first and second credit allowance dates of the qualified equity investment, no certificate shall be issued;

(2) for the calendar year that contains the third credit allowance date of the qualified equity investment, a certificate stating a state new markets tax credit in an amount equal to seven percent of the purchase price of the qualified equity investment shall be issued;

(3) for the calendar year that contains the fourth credit allowance date of the qualified equity investment, a certificate stating a state new markets tax credit in an amount equal to eight percent of the purchase price of the qualified equity investment shall be issued;

(4) for the calendar year that contains the fifth credit allowance date of the qualified equity investment, a certificate stating a state new markets tax credit in an amount equal to eight percent of the purchase price of the qualified equity investment shall be issued;

(5) for the calendar year that contains the sixth credit allowance date of the qualified equity investment, a certificate stating a state new markets tax credit in an amount equal to eight percent of the purchase price of the qualified equity investment shall be issued; and

(6) for the calendar year that contains the seventh credit allowance date of the qualified equity investment, a certificate stating a state new markets tax credit in an amount equal to eight percent of the purchase price of the qualified equity investment shall be issued.

M. The state new markets corporate income tax credits, state new markets premium tax credits and certificates of eligibility may not be transferred or sold except

in connection with the sale of the qualified equity investment with respect to which it was earned.

N. A qualified community development entity whose application is approved under this section shall pay to the department an annual evaluation fee of five thousand dollars ($5,000) on each of the second through seventh anniversary dates of the initial credit allowance.

O. The department may decertify a qualified equity investment, recapture used state new markets tax credits and cause the forfeiture of unused state new markets tax credits and cancellation of certificates when:

(1) any amount of federal tax credit available with respect to qualified equity investments that are eligible for a tax credit under the Statewide Economic Development Act is recaptured under Section 45D of the Internal Revenue Code. The final notice of decertification shall include the amount of recapture of used tax credits, which under this paragraph shall be proportionate to the federal recapture with respect to the qualified equity investment, and state that unused tax credits are forfeited and certificates are canceled;

(2) the qualified community development entity redeems or makes a principal repayment with respect to qualified equity investments that generated the tax credit prior to the final credit allowance date of the qualified equity investment. The final notice of decertification shall include the amount of recapture of used tax credits, which under this paragraph shall be proportionate to the amount of the redemption or repayment with respect to the qualified equity investment, and state that unused tax credits are forfeited and certificates are canceled;

(3) the qualified community development entity fails to invest at least eighty-five percent of the cash purchase price of the qualified equity investment in qualified active low-income community businesses located in the state within twelve months of the issuance of the qualified equity investment and maintain the same level of investment in qualified low-income community investments located in the state until the last credit allowance date for the qualified equity investment. For purposes of calculating the amount of qualified low-income community investments held by a qualified community development entity, an investment shall be considered held by the entity even if the investment has been sold or repaid, provided that the qualified community development entity reinvests an amount equal to the capital returned to or recovered by the entity from the original investment, exclusive of any profits realized, in another qualified low-income community investment located in the state within twelve months of the receipt of the capital, in accordance with the federal regulations promulgated pursuant to Section 45D of the Internal Revenue Code. Any capital returned or repaid to a qualified community development entity with respect to qualified low-income community investments during the twelve months immediately preceding its final credit allowance date are not required to be reinvested and shall be deemed to be continuously invested through the final credit allowance date. The final notice of decertification shall include the amount of recapture of used tax credits, which under this paragraph shall be proportionate to the total amount of all tax credits originally earned by the purchasers of the qualified equity investment being decertified, and state that unused tax credits are forfeited and certificates are canceled; or

(4) the qualified community development entity or purchaser of the qualified equity investment fails to pay the annual evaluation fee to the department. The final notice of decertification shall include the amount of recapture of unused tax credits, which under this paragraph shall be calculated by the department under its rules, and state that unused tax credits are forfeited and certificates are canceled.

P. The department shall provide an initial notice of decertification to the qualified community development entity within two weeks of decertifying the qualified equity investment. The qualified community development entity shall have ninety days to cure any deficiency indicated in the department's initial notice of decertification. If the qualified community development entity fails to cure the deficiency within the ninety-day period, the department shall decertify the qualified equity investment and provide a final notice of decertification to the qualified community development entity, any known purchaser of the qualified equity investment that was eligible to claim the credit for the qualified equity investment, the taxation and revenue department and the insurance division of the public regulation commission within two weeks of decertifying the qualified equity investment. Any recapture of state new markets tax credits under this section shall be the liability of the purchaser that claimed the state new markets tax credits on the purchaser's state corporate income tax return or state premium tax filing.

Q. The qualified community development entity shall keep sufficiently detailed books and records with respect to the investments made with the proceeds of qualified equity investments to allow the direct tracing of proceeds into qualified low-income community investments in a qualified active low-income community businesses in the state.

R. By July 1, 2014 and each year thereafter, each qualified community development entity whose qualified equity investments were certified under this section and that have not achieved their final credit allowance dates shall:

(1) report to the department information about each qualified active low-income community business, including a detailed description of:

(a) the type of businesses that received the qualified equity investment;

(b) the location of businesses that received the qualified equity investment;

(d) the number of new jobs created;

(e) the number of New Mexico residents employed by the qualified active low-income community business and the aggregate wages paid to them;

(f) the number of nonresidents employed by the qualified active low-income community business and the aggregate wages paid to them; and

(g) any other information required by the department; and

(2) provide to the department financial statements and audit reports prepared by an independent auditor.

S. By October 1, 2014 and each year thereafter, the department shall:

(1) compile and assess direct tracking data and any other data that allow the department to assess objectively the effectiveness of the new markets tax credits; and

(2) with the support and assistance of the

legislative finance committee staff, the taxation and revenue department and the insurance division of the public regulation commission, create an annual report that provides an objective assessment of the effectiveness of the new markets tax credits for annual presentation to the revenue stabilization and tax policy committee and any other appropriate legislative committees.

T. For purposes of assessing the effectiveness of

the new markets tax credits, the inability of the department to aggregate data due to sample size shall not relieve the department of the requirement to report all relevant data to the legislature. The department shall provide notice to qualified community development entities applying for the new markets tax credits that information provided to the department might be revealed by the department in reports to the legislature.

U. The revenue stabilization and tax policy committee and other appropriate legislative committees shall review the new markets tax credits for their effectiveness in achieving the goals and meeting the purposes for which the credits were adopted. The review shall be completed by October 1 of each calendar year.

V. As used in this section:

(1) "certificate" means a certificate of eligibility issued by the department stating the maximum amount of a tax credit vested in a certified qualified equity investment and the date and terms of use;

(2) "credit allowance date" means, with respect to any qualified equity investment:

(a) the date on which the qualified equity investment is initially made; and

(b) each of the six anniversary dates thereafter;

(3) "direct tracing" means the tracking, by accepted accounting methods, of the proceeds of qualified equity investments into qualified low-income community investments;

(4) "long-term debt security" means any debt instrument issued by a qualified community development entity, at par value or at a premium, with an original maturity date of at least seven years from the date of its issuance, with no acceleration of repayment, amortization or prepayment features prior to its original maturity date. The qualified community development entity that issues the debt instrument shall not make cash interest payments on the debt instrument during the period beginning on the date of issuance and ending on the final credit allowance date in an amount that exceeds the cumulative operating income, as defined by regulations adopted under Section 45D of the Internal Revenue Code of the qualified community development entity for that period prior to giving effect to the expense of such cash interest payments. The foregoing shall in no way limit the holder's ability to accelerate payments on the debt instrument in situations where the issuer has defaulted on covenants designed to ensure compliance with this section or Section 45D of the Internal Revenue Code;

(5) "low-income community" has the same meaning given to that same term in Section 45D of the Internal Revenue Code;

(6) "new markets tax credit" means a state new markets corporate income tax credit or a state new markets premium tax credit;

(7) "purchase price" means the amount of cash paid to the issuer of a qualified equity investment for the qualified equity investment;

(8) "purchaser" means an original purchaser of the qualified equity investment or a subsequent purchaser of the qualified equity investment;

(9) "qualified active low-income community business" has the same meaning given to that same term in Section 45D of the Internal Revenue Code, except that any business that derives or projects to derive fifteen percent or more of its annual revenue from the rental or sale of real estate shall not be considered a "qualified active low-income community business". This exclusion does not apply to a business that is controlled by, or under common control with, another business if the second business does not derive or project to derive fifteen percent or more of its annual revenue from the rental or sale of real estate and is the primary tenant of the real estate leased from the first business. A business shall be considered a "qualified active low-income community business" for the duration of the qualified community development entity's investment in, or loan to, the business if the entity reasonably expects, at the time it makes the investment or loan, that the business will continue to satisfy the requirements for being a qualified active low-income community business throughout the entire period of the investment or loan;

(10) "qualified community development entity" has the same meaning given to that same term in Section 45D of the Internal Revenue Code; provided that the qualified community development entity has entered into an allocation agreement with the community development financial institutions fund of the United States department of treasury, with respect to credits authorized by Section 45D of the Internal Revenue Code, that includes the state within the service area set forth in the allocation agreement. "Qualified community development entity" also includes a subordinate community development entity that also is a qualified community development entity under Section 45D of the Internal Revenue Code and is controlled by or under common control with the qualified community development entity that applied for the state new markets tax credits;

(11) "qualified equity investment" means any equity investment in, or long-term debt security issued by, a qualified community development entity that:

(a) is acquired after the effective date of this section, at its original issuance, solely in exchange for cash, or that was constituted a qualified equity investment in the hands of a prior holder;

(b) has at least eighty-five percent of its cash purchase price used by the qualified community development entity to make qualified low-income community investments in qualified active low-income community businesses located in the state; and

(c) is designated by the department as a qualified equity investment under this section and is certified by the department as not exceeding the limitations on the aggregate amounts of qualified equity investments that may be certified pursuant to this section, the Corporate Income and Franchise Tax Act and the New Mexico Insurance Code;

(12) "qualified low-income community investment" means any capital or equity investment in, or loan to, any qualified active low-income community business by the qualified community development entity; and

(13) "tax credit" means a credit against the tax liability otherwise due under state law."

SECTION 2. A new section of the Corporate Income and Franchise Tax Act is enacted to read:

"[NEW MATERIAL] CORPORATE INCOME TAX CREDIT--QUALIFIED EQUITY INVESTMENT.--

A. A purchaser of a qualified equity investment certified under the Statewide Economic Development Finance Act

may claim, and the department may allow, a tax credit against the purchaser's corporate income tax liability in accordance with the terms of a certificate of eligibility issued by the economic development department subject to the limitations in this section and the Statewide Economic Development Finance Act. The tax credit that may be claimed pursuant to this section may be referred to as the "state new markets corporate income tax credit".

B. The purposes of the state new markets corporate income tax credit are to:

(1) promote long-term job creation and investment in new, viable businesses; and

(2) fulfill the immediate and long-term goals adopted by the economic development department in its rules.

C. From July 1, 2012 through June 30, 2019:

(1) the maximum amount of qualified equity investments that may be certified and upon which both the thirty-nine-percent state new markets corporate income tax credits and thirty-nine-percent state new markets premium tax credits may be calculated shall be two hundred million dollars ($200,000,000);

(2) the maximum amount of state new markets corporate income tax credits and state new markets premium tax credits that may be issued in certificates of eligibility and claimed by purchasers shall be seventy-eight million dollars ($78,000,000);

(3) for any one calendar year, no more than sixteen million dollars ($16,000,000) of aggregate state new markets corporate income tax credits and state new markets premium tax credits may be claimed or allowed; and

D. For any taxable year, the amount of the tax credit claimed by a purchaser shall not exceed the amount of the taxpayer's corporate income tax liability for that year.

E. A purchaser claiming a state new markets corporate income tax credit shall not claim any other state tax credit, deduction or exemption for the same qualified equity investment that the purchaser used to qualify for the state new markets corporate income tax credit.

F. If the purchaser of a qualified equity investment is a corporation, partnership or limited liability company, any credits earned by the purchaser may be allocated to the partners, members or shareholders of the purchaser for their direct use in accordance with a written agreement between the partners, members or shareholders. For purposes of this section, such an allocation shall not be considered a sale or transfer of the credits.

G. To claim the state new markets corporate income tax credit, a purchaser shall attach to its tax return a certificate of eligibility issued by the economic development department to be applied against the purchaser's corporate income tax liability pursuant to the terms stated on the certificate.

H. The department shall coordinate with the insurance division of the public regulation commission and the economic development department to maintain a record of the cumulative amount of claims for the state new markets corporate income tax credits and state new markets premium tax credits that have been issued.

I. If the amount of the state new markets corporate income tax credit stated on a certificate of eligibility as eligible for use in a particular taxable year exceeds the taxpayer's corporate income tax liability for the taxable year, the excess credit may be carried forward for use in any of the next five taxable years. The latest date of the carryforward is twelve years after the first credit allowance date on which the initial qualified equity investment was made.

J. The state new markets corporate income tax credit and the certificate of eligibility shall not be sold, exchanged or otherwise transferred to another purchaser. The credit is not refundable.

K. When the economic development department provides to the taxation and revenue department a notice of decertification of the qualified equity investment, the taxation and revenue department shall recapture from purchasers that claimed the state new markets corporate income tax credit any used tax credits in the amounts stated on the notice of decertification and cause the forfeiture of any unused tax credits and cancellation of certificates. A recapture shall create a first priority lien on the assets and property of the purchaser in favor of the state and a recurring tax liability for the purchaser until the amount of all state new markets corporate income tax credits received by the purchaser are repaid.

L. Acceptance by a purchaser of a state new markets corporate income tax credit pursuant to this section is authorization by the purchaser for the department to reveal information to the legislature necessary to analyze the effectiveness of the state new markets corporate income tax credit.

M. Notwithstanding any other section of law to the

contrary, the department may disclose the number of purchasers allowed to receive the state new markets corporate income tax credit, the amount of each credit approved and any other information required by the legislature, the economic development department or the taxation and revenue department to aid in evaluating the effectiveness of the state new markets corporate income tax credit.

N. The revenue stabilization and tax policy committee and other appropriate legislative committees shall review the state new markets corporate income tax credit and the state new markets premium tax credit for their effectiveness in achieving the goals and achieving the purposes for which the credits were adopted. The review shall be completed by October 1 of the calendar year.

O. The department may receive a request from and may issue an advisory letter to a qualified community development entity regarding its certified qualified equity investment. The statements contained in an advisory letter shall not be relied upon by any person or entity other than the qualified community development entity that applied for the certification and the purchasers that are entitled to any tax credits generated from investment in the qualified equity investment.

P. As used in this section:

(1) "certificate" means a certificate of eligibility issued by the economic development department stating the maximum amount of a tax credit vested in a certified qualified equity investment and the terms of use;

(2) "credit allowance date" means, with respect to any qualified equity investment:

(a) the date on which the qualified equity investment is initially made; and

(b) each of the six anniversary dates thereafter;

(3) "purchaser" means an original purchaser of the qualified equity investment or a subsequent purchaser of the qualified equity investment;

(4) "qualified community development entity" has the same meaning given to that same term in Section 45D of the Internal Revenue Code; provided that the qualified community development entity has entered into an allocation agreement with the community development financial institutions fund of the United States department of treasury, with respect to credits authorized by Section 45D of the Internal Revenue Code, that includes the state within the service area set forth in the allocation agreement. "Qualified community development entity" includes a subordinate community development entity that also is a qualified community development entity under Section 45D of the Internal Revenue Code and is controlled by or under common control with the qualified community development entity that applied for the state new markets corporate income tax credit; and

(5) "qualified equity investment" means any equity investment in, or long-term debt security issued by, a qualified community development entity that:

(a) is acquired after the effective date of this section, at its original issuance, solely in exchange for cash, or that was constituted a qualified equity investment in the hands of a prior holder;

(c) is designated by the economic development department as a qualified equity investment under the Statewide Economic Development Finance Act and is certified by the economic development department as not exceeding the limitations on the aggregate amounts of qualified equity investments that may be certified pursuant to this section, the New Mexico Insurance Code and the Statewide Economic Development Finance Act."

SECTION 3. A new section of the New Mexico Insurance Code is enacted to read:

"[NEW MATERIAL] PREMIUM TAX CREDIT--QUALIFIED EQUITY INVESTMENT.--

A. A purchaser of a qualified equity investment certified under the Statewide Economic Development Finance Act may claim, and the division may allow, a tax credit against the purchaser's premium tax liability in accordance with the terms of a certificate of eligibility issued by the economic development department, subject to the limitations in this section and the Statewide Economic Development Finance Act. The tax credit that may be claimed pursuant to this section may be referred to as the "state new markets premium tax credit".

B. The purposes of the state new markets premium tax credit are to:

(1) promote long-term job creation and investment in new, viable businesses; and

(2) fulfill the immediate and long-term goals adopted by the economic development department in its rules.

C. From July 1, 2012 through June 30, 2019:

(1) the maximum amount of qualified equity investments that may be certified and upon which both the thirty-nine-percent state new markets premium tax credits and thirty-nine-percent state new markets corporate income tax credits may be calculated shall be two hundred million dollars ($200,000,000);

(2) the maximum amount of state new markets premium tax credits and state new markets corporate income tax credits that may be issued in certificates of eligibility and claimed by purchasers shall be seventy-eight million dollars ($78,000,000);

(3) for any one calendar year, no more than sixteen million dollars ($16,000,000) of aggregate state new markets premium tax credits and state new markets corporate income tax credits may be claimed or allowed; and

D. For any calendar year, the amount of the tax credit claimed by a purchaser shall not exceed the amount of the purchaser's state premium tax liability for that year.

E. A purchaser claiming a state new markets premium tax credit shall not claim any other state tax credit, deduction or exemption for the same qualified equity investment that the purchaser used to qualify for the state new markets premium tax credit.

F. If a purchaser of a qualified equity investment is a corporation, partnership or limited liability company, any credits earned by the purchaser may be allocated to the partners, members or shareholders of the purchaser for their direct use in accordance with a written agreement between the partners, members or shareholders. For purposes of this section, such an allocation shall not be considered a sale or transfer of the credits.

G. To claim the state new markets premium tax credit, a purchaser shall attach to its premium tax filings a certificate of eligibility issued by the economic development department to be applied against the purchaser's premium tax liability pursuant to the terms stated on the certificate.

H. The division shall coordinate with the taxation and revenue department and the economic development department to maintain a record of the cumulative amount of claims for the state new markets premium tax credits and state new markets corporate income tax credits that have been issued. I. If the amount of the state new markets premium tax credit stated on a certificate of eligibility as eligible for use in a particular calendar year exceeds the taxpayer's premium tax liability for the calendar year, the excess credit may be carried forward for use in any of the next five calendar years from the date of maturity of each certificate. The latest date of the carryforward is twelve years after the first credit allowance date on which the initial qualified equity investment was made.

J. The state new markets premium tax credit and the certificate of eligibility shall not be sold, exchanged or otherwise transferred to another purchaser. The credit is not refundable.

K. When the economic development department provides to the division a notice of decertification of the qualified equity investment, the division shall recapture from purchasers that claimed the state new markets premium tax credit any used tax credits in the amounts stated on the notice of decertification and cause the forfeiture of any unused tax credits and cancellation of certificates. A recapture shall create a first priority lien on the assets and property of the purchaser in favor of the state and a recurring tax liability for the purchaser until the amount of all state new markets premium tax credits received by the purchaser are repaid.

L. Acceptance by a purchaser of a state new markets premium tax credit pursuant to this section is authorization by the purchaser for the division to reveal information to the legislature necessary to analyze the effectiveness of the state new markets premium tax credit.

M. Notwithstanding any other section of law to the

contrary, the division may disclose the number of purchasers allowed to receive the state new markets premium tax credit, the amount of each credit approved and any other information required by the legislature, the economic development department or the division to aid in evaluating the effectiveness of the state new markets premium tax credit.

N. The revenue stabilization and tax policy committee and any other appropriate legislative committees shall review the state new markets premium tax credit and state new markets corporate income tax credit for their effectiveness in achieving the goals and meeting the purposes for which the credits were adopted. The review shall be completed by October 1 of the calendar year.

O. The division may receive a request from and may issue an advisory letter to a qualified community development entity regarding its certified qualified equity investment. The statements contained in an advisory letter shall not be relied upon by any person or entity other than the qualified community development entity that applied for the certification and the purchasers that are entitled to any tax credits generated from investment in the qualified equity investment.

P. As used in this section:

(2) "credit allowance date" means, with respect to any qualified equity investment:

(a) the date on which the qualified equity investment is initially made; and

(b) each of the six anniversary dates thereafter;

(3) "purchaser" means an original purchaser of the qualified equity investment or a subsequent purchaser of the qualified equity investment;

(4) "qualified community development entity" has the same meaning given to that same term in Section 45D of the Internal Revenue Code of 1986; provided that the qualified community development entity has entered into an allocation agreement with the community development financial institutions fund of the United States department of treasury, with respect to credits authorized by Section 45D of the Internal Revenue Code of 1986 that includes the state within the service area set forth in the allocation agreement. "Qualified community development entity" includes a subordinate community development entity that also is a qualified community development entity under Section 45D of the Internal Revenue Code of 1986 and is controlled by or under common control with the qualified community development entity that applied for the state new markets premium tax credit; and

(5) "qualified equity investment" means any equity investment in, or long-term debt security issued by, a qualified community development entity that:

(a) is acquired after the effective date of this 2012 act, at its original issuance, solely in exchange for cash, or that was constituted a qualified equity investment in the hands of a prior holder;

(c) is designated by the New Mexico finance authority as a qualified equity investment under the Statewide Economic Development Finance Act and is certified by the New Mexico finance authority as not exceeding the limitations on the aggregate amounts of qualified equity investments that may be certified pursuant to this section, the Corporate Income and Franchise Tax Act and the Statewide Economic Development Finance Act."

SECTION 4. DELAYED REPEAL.--The provisions of this act are repealed on July 1, 2019.

SECTION 5. EFFECTIVE DATE.--The effective date of the provisions of this act is July 1, 2012.

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